Nigerian digital payments firm Interswitch confirmed today it has reached unicorn status after Visa acquired a minority equity stake in the firm. Global payments giant Visa will invest $200 million for 20% stake in Interswitch, electronic payments company, UK’s Sky News reports. The investment places a billion-dollar valuation on 17-year old Interswitch and is a major boon ahead of a proposed initial public offering slated for the London Stock Exchange next year.
“The investment makes Interswitch one of the most valuable African fintech businesses with a valuation of $1 billion,” Interswitch said in a release to TechCrunch.
The Visa investment could create the first of two market distinctions for Interswitch — as it shouldn’t change the Lagos-based company’s plans to go public.
Visa will join Helios Investment Partners, TA Associates and IFC as the primary shareholders in Interswitch. Andrew Toree, Visa’s regional president for Europe, the Middle East and Africa said that Africa — the world’s second-fastest growing banking market according to a 2017 McKinsey report — is a “priority region” for the company.
Interswitch has long been expected to launch an initial public offering (IPO) to allow the original investors to offload part of their stakes in the company.
Founded in 2002 by Nigerian entrepreneur Mitchell Elegbe, Interswitch also owns Verve – the largest domestic debit card scheme in Africa – and Quickteller, a consumer payments platform that enables money transfers, bill payments and mobile and internet air time purchases. He said:
“Sub-Saharan Africa is the fastest growing payments market in the world, with growth driven by a young and dynamic population, rapidly evolving consumer behaviour, and an increasing desire for payment solutions that can be accepted across the continent and abroad. I am delighted that Interswitch has formed a partnership with Visa, with whom we plan to drive the next phase of transformation in the African payments landscape.”
Quickteller processed over 42 million transactions monthly as of 31 July – the equivalent of more than 560 billion naira ($1.82 billion).
The backing from Visa is the latest in a string of moves by global payments companies backing African fintech companies and seeking high-growth bets in emerging markets. The fundamental importance of the services that fintech companies provide—from powering payments, facilitating savings and ensuring financial inclusion for the unbanked to tackling access to credit for small businesses and individuals—underlines why the sector holds long-term appeal for investors. And, by most metrics, Interswitch represents significant value proposition given its established strength as an early-day and major player in financial technology with operations in over 20 African countries.
African fintech startups backed by global payments giants | |
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Paystack | Visa, Stripe (Aug. 2018) |
Flutterwave | Mastercard (Oct. 2018) |
Tala | PayPal (Oct. 2018) |
Branch | Visa (April 2019) |
Interswitch | Visa (Nov. 2019) |